Greentree Hospitality Group Incorporated v. Mullinix

1 WO [5] 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA [8] 9 Greentree Hospitality Group Incorporated, No. CV-22-00088-PHX-DJH 10 Plaintiff, ORDER 11 v. 12 Patrick Mullinix, 13 Defendant. [14] 15 Plaintiff Greentree Hospitality Group Incorporated (“Plaintiff”) has filed a Motion 16 for Award of Attorneys’ Fees and Non-taxable Costs (Doc. 20),1 wherein Plaintiff seeks 17 $13,668.00 in fees and $567.00 in costs. (Id. at 43). The Motion is unopposed; 18 Defendant Patrick Mullinix (“Defendant”) did not file a response and the time to do so 19 has passed. See LRCiv 7.2. For the following reasons, Plaintiff’s Motion is granted. 20 I. Background2 21 Plaintiff brought a single claim for breach of contract under California state law. 22 (Doc. 1 at ¶¶ 22–23). The parties executed four contracts: (1) a Franchise Development [23] 1 Local Rule 54.2 provides that the following documents must be attached to a motion for 24 fees: (1) a Statement of Consultation; (2) a copy of a fee agreement or statement that there is no fee agreement; (3) a Task-Based Itemized Statement providing the required 25 description of services rendered; (4) an affidavit of moving counsel; and (5) “[a]ny other affidavits or evidentiary matter deemed appropriate . . . or required by law.” 26 LRCiv 54.2(d)(1)-(5). Plaintiff’s Motion complies with these requirements. (See Doc. 20 at 8–13, 27–43). [27] 2 The Court’s prior Order contained extensive background information, and the Court 28 will not repeat it here. (Doc. 14 at 1–3). 1 Agreement (“Franchise Agreement”) (Doc. 11-1); (2) a Promissory Note (“Note”) 2 (Docs. 11-2; 20 at 24–26); (3) a Guaranty of Payment (“Guaranty”) (Docs. 11-3; 20 at 3 15–22); and (4) a Share Pledge Agreement (Doc. 11-4).3 Under the terms of the Note, 4 Defendant obtained a $150,000.00 loan (the “Loan”) from Plaintiff through his capacity 5 as President and CEO of non-party Advantage Hotels, Inc. (“Advantage”). (Doc. 11-2 6 at 2). Under the terms of the Guaranty, Defendant guaranteed “the full, prompt, and 7 complete payment” of the Loan when due. (Doc. 11-3 at 2–3). Plaintiff filed this action 8 when Defendant failed to make payments on the principle of the Loan. (Doc. 1 at ¶ 16). 9 Defendant did not defend or otherwise appear in this case. Thus, by previous 10 Order, the Court granted Plaintiff’s Motion for Entry of Default Judgment against 11 Defendant and awarded Plaintiff $166,364.80 in damages.4 (Docs. 11; 14; 18). Plaintiff 12 now seeks an award of $13,668.00 in attorneys’ fees and $567.00 in costs. 13 (Doc. 20 at 43). Jennings Strouss & Salmon, P.L.C. (“JSS”) represents Plaintiff. 14 II. Legal Standard 15 A party seeking an award of attorneys’ fees must show it is eligible for and 16 entitled to an award, and that the amount sought is reasonable. LRCiv 54.2(c). 17 Eligibility and entitlement to an award is dependent on “the applicable statutory or 18 contractual authority upon which the movant seeks an award[.]” LRCiv 54.2(c)(1). To 19 determine whether an award is reasonable, courts assess the following factors: [20] (1) the time and labor required, (2) the novelty and difficulty of the 21 questions involved, (3) the skill requisite to perform the legal service properly, (4) the preclusion of other employment by the attorney due to 22 acceptance of the case, (5) the customary fee, (6) whether the fee is fixed or 23 contingent, (7) time limitations imposed by the client or the circumstances, (8) the amount involved and the results obtained, (9) the experience, 24 reputation, and ability of the attorneys, (10) the ‘undesirability’ of the case, 25 (11) the nature and length of the professional relationship with the client, and (12) awards in similar cases. [27] 3 The Guaranty and Share Pledge Agreement were executed concurrently with the Note. [28] 4 The Court also awarded Plaintiff pre and post judgment interest. (Doc. 18). 1 Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975), cert. denied, 425 U.S. 2 951 (1976); see also LRCiv 54.2(c)(3). 3 II. Discussion 4 The Court will determine whether Plaintiff is eligible for and entitled to an award 5 of attorneys’ fees before assessing the reasonableness of the amount requested. 6 A. Eligibility and Entitlement 7 Eligibility and entitlement to an award depends on “the applicable statutory or 8 contractual authority upon which the movant seeks an award[.]” LRCiv 54.2(c)(1). An 9 award is proper if based on “a contract, an applicable statute, a finding that the losing 10 party acted in bad faith, or other exceptional circumstances.” Sea-Land Serv., Inc. v. 11 Murrey & Son’s Co. Inc., 824 F.2d 740, 744 (9th Cir. 1987). “The Ninth Circuit has [] 12 held the assignment of attorneys’ fees based on a provision in a contractual agreement is 13 enforceable.” Scottsdale Gas Co. LLC, v. Tesoro Ref. & Mktg. Co. LLC, 2021 WL 14 2895501, at *2 (D. Ariz. July 9, 2021) (citing Stitt v. Williams, 919 F.2d 516, 529 (9th 15 Cir. 1990)). 16 Plaintiff contends it is eligible for and entitled to an award under the fee provisions 17 contained in the Note and the Guaranty (collectively the “Agreements”). (Doc. 20 at 2– 18 3). Section 9 of the Note states: [19] [i]f this Note is not paid when due or if any Event of Default occurs, 20 [Advantage] promises to pay any and all costs of enforcement and collection, including but not limited to, reasonable attorneys’ fees, whether 21 or not an action or proceeding is brought to enforce the provisions hereof. [22] (Id. at 26). Section 2(c) of the Guaranty further imposes the following obligation on [23] Defendant: [24] 25 [Defendant] hereby agrees to indemnify, defend, and save harmless [Plaintiff] from and against any and all out-of-pocket fees, costs, losses, 26 liabilities, claims, causes of action, expenses and damages, including 27 reasonable attorneys’ fees and disbursements . . . which [Plaintiff] actually suffers or incurs in connection with the enforcement by [Plaintiff] of this 28 Guaranty. 1 (Id. at 16). The Court will construe these fee provisions under California state law 2 according to the Agreements’ choice-of-law provisions.5 (Doc. 20 at 19, 26); see e.g, ME 3 SPE Franchising LLC v. NCW Holdings LLC, 2023 WL 2691562 , *2 (D. Ariz. Mar. 29, 4 2023) (applying Arizona law to interpret the scope of a fee provision in a contract 5 governed by Arizona law); Spirit Master Funding IV LLC v. Martinsville Corral Inc., [6] 2016 WL 4877622 , at *2 (D. Ariz. Sept. 15, 2016) (applying Indiana law to interpret the 7 scope of a fee provision in a contract governed by Indiana law); see also Diamond v. 8 John Martin Co., 753 F.2d 1465, 1467 (9th Cir. 1985) (“The rule in this circuit requires 9 that federal courts in diversity actions apply state law with regard to the allowance (or 10 disallowance) of attorneys’ fees.”). 11 California state law permits recovery of attorneys’ fees when authorized by 12 contract: [13] In any action on a contract, where the contract specifically provides 14 that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then 15 the party who is determined to be the party prevailing on the contract, 16 whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs. [18] Cal. Civ. Code § 1717 . Courts may award attorneys’ fees when a party has filed suit 19 under a contract that includes a valid agreement for a fee award to the prevailing 20 party. See Cal. Civ. Proc. Code § 1021 (“Except as attorney’s fees are specifically 21 provided for by statute, the measure and mode of compensation of attorneys and 22 counselors at law is left to the agreement, express or implied, of the parties.”); see also 23 Progressive Sols., Inc. v. Stanley, 2018 WL 6267837 , at *2 (N.D. Cal. July 13, 2018) 24 (citing Cal. Civ. Proc. Code §§ 1032 (b); 1033.5(a)(10)). “Whether a contractual attorney 25 fee clause provides for a fee award in a particular case is a question of contract 26 interpretation.” Makreas v. First Nat’l Bank of N. California, 2014 WL 2582027 , at *2 27 5 Plaintiff did not note the Agreements’ choice-of-law provision in their Motion and rather applied Arizona state law to conclude it is eligible and entitled to an award of fees. 28 (See Doc. 30 at 2–3). Because the Court ultimately finds Plaintiff is eligible and entitled to an award of fees under California law, this distinction is not outcome determinative. 1 (N.D. Cal. June 9, 2014) (quoting Windsor Pac. LLC v. Samwood Co., Inc., 152 Cal. 2 Rptr. 3d 518, 527 (Cal. Ct. App. 2013)). 3 This matter is indeed an “action on a contract” under Section 1717 of the 4 California Civil Code because it arose out of Defendant’s breach of the Guaranty and 5 Plaintiff’s efforts to enforce the Guaranty. Cal. Civ. Code § 1717 . The Agreements 6 expressly provide that Plaintiff may recover from Defendant reasonable attorneys’ fees it 7 incurs to enforce the terms of the Guaranty. (Doc. 20 at 26, 16). And Plaintiff prevailed 8 on its breach of contract claim having obtained default judgment against Defendant. 9 (Docs. 18; 19). Therefore, Plaintiff is eligible and entitled to an award of fees under the 10 Agreement’s fee provisions. 11 C. Reasonableness of Fees 12 The Court must now determine whether Plaintiff’s request for $13,668.00 in 13 attorneys’ fees and $567.00 in costs is reasonable. (Doc. 20 at 43). “Where a contract 14 provides for attorneys’ fees but does not specify a particular sum, it is within the trial 15 court’s discretion to determine what constitutes reasonable attorneys’ fees.” Progressive 16 Solutions, Inc. v. Stanley, 2018 WL 6267837 , at *4 (N.D. Cal., 2018) (quoting Niederer 17 v. Ferreira, 189 Cal. App. 3d 1485, 1507 (Cal. Ct. App. 1987)). “The most useful 18 starting point for determining the amount of a reasonable fee is the number of hours 19 reasonably expended on the litigation multiplied by a reasonable hourly rate.” Hensley v. 20 Eckhart, 461 U.S. 424, 433 (1983); This calculation is commonly known as the 21 “lodestar” method. Blanchard v. Bergeron, 489 U.S. 87, 94 (1989); see also PLCM 22 Group v. Drexler, 22 Cal. 4th 1084, 1095 (Cal. 2000) (“The fee setting inquiry in 23 California ordinarily begins with the lodestar.”). Once this initial lodestar figure is 24 calculated, courts may then adjust the result by considering “other factors.” Blanchard, [25] 489 U.S. at 94 . 26 Plaintiff argues its fee request is reasonable under the twelve Kerr factors. (Id. at 27 3–6 citing LRCiv 54.2(c)). The Court will examine each factor in turn. 28 / / / 1 1. Time and Labor Required 2 The Task-Based Itemized Statement of Fees (“Itemized Statement”) reflects that 3 Undersigned Counsel spent 49.20 hours of time on this matter, totaling to $13,668.00 in 4 fees. (Doc. 20 at 42). Plaintiff filed its Complaint, promptly filed for entry of default, 5 and attended a damages hearing. (Docs. 1; 11; 17). The Court finds the time and labor 6 required to represent Plaintiff as accounted for in the Itemized Statement are accurate and 7 reasonable. See LRCiv 54.2(e)(2) (“The party seeking an award of fees must adequately 8 describe the services rendered so that the reasonableness of the charge can be 9 evaluated.”). 10 2. Novelty and Difficulty 11 This contract action did not present any novel or difficult issues. 12 3. Requisite Skill 13 Breach of contract cases require skills in commercial litigation. 14 4. Preclusion of Other Employment 15 Undersigned Counsel represents he was not precluded from other employment. 16 (Doc. 20 at 5). 17 5. Customary Fee 18 Undersigned Counsel and Plaintiff entered into a fee agreement indicating JSS’s 19 customary billing rates ranged from $260 per hour for new associates to $525 per hour 20 for senior partners. (Id. at 30). However, Undersigned Counsel states the fee agreement 21 was orally modified and Plaintiff was billed at the following discounted rates: partners 22 were billed at $300 per hour;6 associates were billed at $250 per hour; paralegals were 23 billed at $150 per hour; and legal assistants were billed at $115 per hour. (Id. at 5, 11– 24 12). Undersigned Counsel further represents that “all of these rates are reasonable and 25 well within, if not below, the customary fees charged for individuals with comparable 26 expertise at comparable law firms in Phoenix.” (Id. at 5). 27 / / / 28 6 Undersigned Counsel avers that his normal billing rate is $375 per hour but he reduced it to $300 per hour for this matter. (Doc. 20 at 5) 1 6. Fixed or Contingent Fee 2 Plaintiff did not enter into a contingent fee agreement with Undersigned Counsel. 3 7. Time Limitations 4 There is no indication that Plaintiff placed any time limitations on its Counsel. 5 8. Amount Involved and Results Obtained 6 In its Complaint, Plaintiff sought the $150,000.00 Defendant owes on the 7 Guaranty, plus interest. (Doc. 1 at 1). The Court entered default judgment against 8 Defendant for $166,364.80 (Doc. 19), which is full amount requested in Plaintiff’s claim. 9 9. Experience, Reputation, and Ability of the Attorneys 10 Undersigned Counsel represents that “[a] large part of [his] practice is comprised 11 of representing hotels and hospitality companies in litigation matters, 12 including . . . breach of contract . . . .” (Doc. 20 at 10). His clients include 13 independently-owned hotels, publicly-traded international hotel chains, and Real Estate 14 Investment Trusts. (Id. at 6). 15 10. The Case’s Undesirability 16 This case is neither particularly desirable nor undesirable. 17 11. Nature and Length of relationship with the Client 18 Undersigned counsel states he “has represented, and continues to represent, 19 [Plaintiff] in a number of actions around the country.” (Id.) 20 12. Awards in Similar Cases 21 Plaintiff points the Court to Brad Hall & Associates Inc. v. Elkotb to argue the 22 present request for fees is comparable to awards in similar actions. 2022 WL 3082527 23 (D. Ariz. Aug. 3, 2022). In Brad Hall, the plaintiff obtained default judgment for breach 24 of a commercial agreement and this district approved an award of $15,565.00 in 25 attorneys’ fees under parties’ contractual provision. Id. at *1–2. The Court similarly 26 finds Plaintiff’s request for $13,668.00 in fees reasonable here. 27 To summarize, Plaintiff’s request for an award is reasonable under the twelve Kerr 28 factors. 1 C. Costs 2 The Court last turns to Plaintiff’s request for $567.00 in costs, which is comprised 3|| of court filing fees and service fees. (Doc. 20 at 42). The fee provisions in the 4|| Agreements entitle Plaintiff to “any and all costs of enforcement and collection” of the Loan. (Ud. at 26). Section 1717 of the California Civil Code also permits recovery of 6|| “other costs” in an award of attorney fees. Cal. Civ. Code § 1717 . The Court will thus award Plaintiff the entirety of its requested expenses under the fee provisions. IV. Conclusion 9 Plaintiff is eligible for and entitled to an award of all fees and expenses associated 10 || with its breach of contract claim under the parties’ fee provisions. The Court finds the 11 || 49.20 hours of time on this matter is reasonable and JSS applied reasonable billing rates. The Court will therefore award Plaintiff an award of $13,668.00 in attorneys’ fees and 13 || $567.00 in costs. 14 Accordingly, 15 IT IS ORDERED that Plaintiff Greentree Hospitality Group Incorporated’s || Motion for Award of Attorneys’ Fees and Non-taxable Costs (Doc. 20) is GRANTED. 17|| The Court approves an award of $13,668.00 in attorneys’ fees and $567.00 in costs, for 18 || which Defendant Patrick Mullinix is liable. 19 Dated this 7th day of September, 2023. [20] 21 5 ip Gum □□ 22 norable’Dian¢g4. Hurietewa 3 United States District Judge [28] -8-